Consumer Protection
Domestic Consumer Contracts
12. The Electricity Commission should ensure that the terms and conditions of contracts between domestic consumers and electricity retailers (and where applicable, contracts between domestic consumers and electricity distributors) reflect the reasonable expectations of consumers. The Commission should develop, in consultation with the Ministry of Consumer Affairs and other relevant interests, model terms and conditions or guidelines for these contracts. It should recommend regulations if model arrangements or guidelines are not comprehensively implemented.
13. The Commission should include the following matters in the contracts:
- transparency of charge components
- frequency of billing
- company-specific arrangements for dispute resolution
- arrangements for informing consumers about planned outages
- arrangements for the benefit of low income domestic consumers as described below.
14. When developing arrangements for domestic consumer contracts, the Commission should have regard to any provision by the Commerce Commission for distribution businesses to engage with local communities on the trade-offs they wish to make concerning price and quality and reliability of supply.
Low Fixed Charges
15. The Government has introduced regulations7 to require retailers to offer low fixed charge tariff options of no more than 30c per day8 to domestic consumers. These tariff options should incorporate the following design features:
- domestic consumers consuming less than 8,000kWh/year must pay less on a low fixed charge tariff option than on any corresponding tariff option
- the low fixed charge tariff options are to be advertised in the same manner as existing tariffs
- the retailer must inform domestic consumers at least annually whether it may be beneficial for them to switch to a low fixed charge tariff option
- the low fixed charge tariff options need only be available for homes where consumers usually reside
- all retailers should make the tariffs genuinely available (subject to usual credit-worthiness tests), irrespective of the usage of the consumer, and
- tariffs with tiers below 8,000kWh per annum (e.g. high c/kWh for the first 2,000kWh per annum) are proscribed to ensure that the lower fixed charge offers genuine advantages to small consumers.
16. The regulations also require distribution companies to offer low fixed charge distributor tariff options (to retailers or direct to consumers) at a maximum of 15c per connection per day. Compliance with the low fixed charge policy will be measured both before and after any rebates or discounts. Any rebates or discounts must apply consistently to consumers regardless of whether they are on a low fixed charge or standard tariff option.
17. The Commission will be charged with monitoring and enforcing these regulations.
Arrangements for the Benefit of Low Income Domestic Consumers
18. The Commission should develop arrangements and recommend regulations if necessary to ensure that:
- consumers who may have difficulty paying their bills on time have access to electricity (although in a way that does not require retailers to accept unreasonable credit risk)
- consumers have access to a mechanism to assist with budgeting if required
- consumers who have difficulty paying can avoid the costs of frequent disconnections and reconnections, and
- clear guidelines or standards exist for disconnections following non-payment.
19. The Commission should consider options such as pre-payment meters, alternative payment options (such as advance payments, more frequent payments or smoothed payments) and bonds. In principle, the Government considers that bonds in excess of the value of one month's consumption by an average household are inconsistent with fairness.
Arrangements in the Event of Retailer Insolvency
20. The Commission should establish arrangements to ensure an orderly transition for consumers in the event that a retail company becomes insolvent.
Consumer Complaints Resolution System
21. The Government expects everyone (including potential consumers and owners and occupiers of land) to have access to a free, independent system for resolving complaints about electricity distributors (including Transpower) and electricity retailers, whether or not they have a consumer contract with the retailer or distribution company.
22. The Government expects the Electricity Commission, in consultation with the Ministry of Consumer Affairs, to ensure a system is in place that meets the Government's expectations and includes the following features:
- a code of practice for electricity distributors and electricity retailers setting minimum standards of conduct
- membership by all distributors (including Transpower) and retailers
- robust internal complaints-handling processes within all member companies
- an independent, external, complaints resolution scheme that meets standard benchmarks, such as accessibility, independence, fairness, accountability, efficiency and effectiveness
- self-funding by the industry, and
- compensation where appropriate.
23. The Government supports the existing Electricity Complaints Commission Scheme and the associated Electricity Consumer Code of Practice. However, not all retailers and distribution companies have joined the scheme and the scheme's coverage falls short of the expectations set out above.
24. The Government therefore expects that the Electricity Commission will encourage the industry to develop this scheme further in a way that ensures it is consistent with the Government's expectations. If the industry is unable to provide an acceptable scheme, the Commission should recommend regulations to introduce a statutory scheme.
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